Targeted Income Growth Solutions for Financial Professionals

Verity Investment Management provides innovative income growth solutions for financial advisors, endowments, pension plans and other financial professionals. We offer a unique approach to dividend growth investing designed to deliver targeted levels of annual income and income growth as well as competitive long-term total returns.

What We Do

We build growing streams of dividend income.

Clients have used our targeted dividend growth approach for over 20 years, and we have found that the combination of short-term income and long-term growth that it provides has enabled them to meet their investment goals with greater confidence and peace of mind through all market environments.

FINANCIAL ADVISORS

Financial advisors use our approach as a solution to their clients’ pre-retirement and retirement income goals and as the foundation for sound financial planning based on the ability to forecast current and future cash flows.

Pre-retirees can reinvest the income as additional savings while building a larger stream of future retirement income and growth. When they are ready to retire, they can simply start withdrawing the income monthly to fund their expenses.
Retirees can receive a growing stream of monthly retirement income while keeping their savings invested to grow over time.

ENDOWMENTS AND FOUNDATIONS

Endowments and foundations use our approach to fund their annual distributions without depleting the endowment’s principal. Having a spending policy that is aligned with actual income produced provides a more predictable funding stream with less volatility.

PENSION PLANS

Pension plans use our approach to fund cash distributions to members while keeping the pension fully funded. This sound approach to asset/liability matching aligns plan participants, management and trustees.

How We Invest

We are obsessed about dividend growth.

Philosophy

We invest only in companies that grow their dividends.

Our investment philosophy is anchored in our belief in the power of consistent dividend growth, and every portfolio company is expected to grow their dividend annually. We have found that high-quality companies that consistently increase their dividends can provide dependable income and income growth, below-market volatility and superior long-term returns.

CONSISTENT DIVIDEND GROWTH DEMONSTRATES:

The ability to prosper in diverse economic times

Growing and predictable earnings and cash flow

Management’s confidence in future business conditions

A commitment to shareholders

RETURNS OF S&P 500 STOCKS BY DIVIDEND POLICY (2002-2022)


2002 Value
2022 Value
Annualized Return
Dividend cutters and eliminators	Non-dividend paying stocks	Dividend payers with no change in dividend	Dividend growers and initiators
$10,000	$10,000	$10,000	$10,000
$3,310	$29,470	$27,060	$52,850
-5.4%	5.5%	5.1%	8.7%

Source: Ned Davis Research, Inc., Refinitiv

APPROACH

We perform four jobs for our clients.

Our investment approach is focused on structuring diversified portfolios of dividend growth companies that deliver targeted levels of current income and income growth. The selection of these companies is based upon the ability of each company to accomplish four jobs for our clients:

PORTFOLIO CONSTRUCTIONS - THE FOUR JOBS

1

Provide significant and reliable current income

2

Grow income annually at targeted rates

3

Provide attractive long-term total returns

4

Be resilient in down markets

PROCESS

We combine quantitative screening and fundamental analysis.

Our investment process builds on our commitment to the four jobs. We employ a combination of quantitative screens and fundamental analysis to establish our investible universe and to rank opportunities for security selection.

Our initial screen begins with all publicly traded securities on U.S. exchanges and must meet a number of factors, including the following three minimum criteria:

3 years of dividend growth
2 percent average dividend growth rate
1 percent current dividend yield

STEPS

1

Perform quantitative analysis of investable universe using proprietary models to rank companies.

2

Conduct fundamental analysis of top-ranked companies with a special focus on dividend growth expectations.

3

Construct diversified portfolio that balances the four jobs to meet client objectives.

4

Monitor and adjust as needed to make sure portfolio is achieving targets for income, income growth and appreciation.

Client Solutions

Each strategy solves specific client objectives.

We offer three strategies designed to achieve different income and income growth objectives for clients.

LONG TERM OBJECTIVES


Enhanced Yield
Core Income Growth
Focused Dividend Growth
Yield Target	Annual Dividend Growth Target
4.0% - 5.0%	4% - 6%
3.0% - 4.0%	6% - 8%
2.0% - 3.0%	8+%

KEY METRICS


Enhanced Yield
Core Income Growth
Focused Dividend Growth
Russell 1000 Value Index*
Dividend Yield	Dividend Growth (5 yr, historical)	Weighted Avg. Market Cap (mil)	P/E (NTM)	EPS Growth (5 yr, historical)	ROIC	# of Holdings
4.2%	5.6%	126,015	15.1x	5.5%	9.7%	40
3.5%	7.4%	271,383	17.0x	8.4%	12.2%	53
2.5%	8.5%	524,318	19.8x	10.4%	18.4%	40
2.1%	3.2%	169,676	16.7x	5.5%	7.2%	872

Source: FactSet. Data as of 9/30/2024
*Based on iShares Russell 1000 Value ETF

Fact Sheets and Dividend Scorecards